Slipping through the loopholes of Personal Injury Protection reform

The following article was published in The Miami Herald on April 16, 2012:

Slipping throught the loopholes of PIP reform 

Florida’s new Personal Injury Protection (PIP) auto-insurance reform bill hasn’t even been signed into law by Gov. Rick Scott yet, but already there are disturbing signs some medical providers may be trying to exploit potential loopholes in it.

The April 4 article Tampa company looks at end run around new PIP law reported that a Tampa medical staffing company was offering to send doctors to chiropractors’ offices to sign forms stating that patients had emergency conditions.

This kind of behavior, which appears to be an attempt to game the reform, could blow a gigantic hole into one of the key cost-saving provisions in the new PIP bill. That’s because under the bill, auto-accident victims with nonemergency injuries will have $2,500 in medical coverage, while those with true emergency injuries will have access to their full $10,000 in PIP benefits.

This is a cautionary tale for Florida’s senior elected officials, state legislators and insurance regulators who will be watching closely in the months ahead to see if the PIP reforms they crafted actually root out the rampant fraud and abuse in the system and if they reduce costs enough so that consumers will benefit from lower auto insurance premiums over time.

The bill has several good provisions to rein in bogus medical clinics, eliminate incentives for trial lawyers to sue and provide insurers and law enforcement officials with new fraud-fighting tools.

It actually requires auto insurers to reduce rates 10 percent by Oct. 1 and 25 percent by 2014 or provide a detailed explanation why they can’t. Insurers’ rates are driven by losses they sustain, and at this point, no one really knows yet whether the PIP reform bill will achieve its goal.

As we’ve seen in the case of the Tampa medical staffing firm, the PIP cottage industry will undoubtedly seek loopholes in the reform bill to keep medical billings high.

Trial lawyers may be undeterred by a part of the bill that prevents them from increasing their fees by 250 percent. And many of the bill’s key provisions don’t kick in until 2013 – months after the Legislature’s first deadline for insurers to lower rates.

If PIP reform is a success, medical and litigation costs should come down and consumers should receive the full benefit of lower rates. But elected leaders and regulators must be careful not to expect lower rates without clear evidence that the bill is reducing costs from fraud. In fact, prematurely pressuring rates could destabilize the auto insurance market that policymakers are trying to fix and ultimately harm the consumers they are trying to help.